Podcast: Mile Marker 12 – Roth Conversions

Roth Conversions: How to Decide, How Much, and When

Presented by Retirement GPS: Navigated by Zynergy

Taxes: Pay Now or Pay Later?

When it comes to retirement planning, one of the most strategic questions you’ll face is whether to pay taxes now or defer them until later. That’s the essence of a Roth conversion.

Moving dollars from a traditional IRA into a Roth IRA means you’ll pay taxes today—but in exchange, those funds grow tax-free and can be withdrawn tax-free for the rest of your life. Done correctly, a Roth conversion can reduce lifetime taxes, provide more flexibility in retirement, and create a powerful legacy for heirs.

The Basics: Traditional vs. Roth

Think of retirement accounts like amusement parks:

Traditional IRA: Free to enter (tax-deferred on the way in), but you pay at the exit (taxes on every dollar withdrawn, plus Required Minimum Distributions starting at age 73).
Roth IRA: Pay at the entrance (taxes on contributions or conversions now), but once inside, everything is free forever—no taxes on growth, no taxes on withdrawals, and no RMDs for the original owner.

Both accounts have value, but Roth dollars provide tax-free flexibility later in life.

Why Roth Conversions Matter

Conversions can be especially powerful in certain scenarios:

Early retirement years (before Social Security and pension income begin)
Large traditional IRA balances that would create oversized RMDs later
Tax diversification—spreading savings across taxable, tax-deferred, and Roth buckets for flexibility
Legacy planning—heirs inherit Roth dollars with tax advantages

Risks and Rules You Can’t Ignore

Roth conversions aren’t one-size-fits-all. Key considerations include:

Tax brackets: Conversions add taxable income—stay within your target bracket.
Medicare IRMAA: Higher income can trigger surcharges on Medicare premiums.
Social Security taxation: Conversions may increase how much of your benefits are taxed.
No do-overs: Since 2018, conversions are permanent—you can’t undo them.
Five-year rules: Withdrawals of earnings require five tax years and age 59½ (with exceptions); converted amounts have their own five-year clocks if under 59½ .

Our Step-by-Step Approach

At Zynergy, we size conversions one year at a time, using this process:

Project income and deductions to see where you fall on the tax bracket ladder.
Measure bracket room and decide how much to convert without spilling into the next bracket unnecessarily.
Test downstream effects—Medicare IRMAA, Social Security taxation, capital gains, and deductions.
Set this year’s amount, execute, and revisit annually.

This “one-year window” approach ensures conversions are right-sized and adapted as tax laws, income, and personal circumstances evolve .

Action Steps

Here’s how to get started:

Gather your current-year numbers (income, deductions, investment income, one-time events).
Model your bracket room to see where a conversion fits.
Use a Roth Conversion Fact Finder or work with an advisor to project impacts.
Coordinate with your CPA before executing.
Revisit annually—what works this year may not work next year.

Want the strategy behind the framework?

Listen to Episode 12 of the Retirement GPS Podcast: Roth Conversions – How to Decide, How Much, and When